'Recessions can hurt, but austerity kills'

In the US, more than five million people have lost access to health care. In Greece, there's a 200% increase in HIV cases. And in some of the worst-hit countries, suicide rates are up. David Stuckler, author of an explosive new book, says the facts speak for themselves

A man begging on a street in Athens as an anti-austerity demonstration passes by. Greece used to have one of the lowest suicide rates in Europe, but have gone up by 60%. Photograph: Reuters

The austerity programmes administered by western governments in the wake of the 2008 global financial crisis were, of course, intended as a remedy, a tough but necessary course of treatment to relieve the symptoms of debts and deficits and to cure recession. But if, David Stuckler says, austerity had been run like a clinical trial, "It would have been discontinued. The evidence of its deadly side-effects – of the profound effects of economic choices on health – is overwhelming."

Stuckler speaks softly, in the measured tones and carefully weighed terms of the academic, which is what he is: a leading expert on the economics of health, masters in public health degree from Yale, PhD from Cambridge, senior research leader at Oxford, 100-odd peer-reviewed papers to his name. But his message – especially here, as even the IMF starts to question chancellor George Osborne's enthusiasm for ever-deeper budget cuts – is explosive, backed by a decade of research, and based on reams of publicly available data: "Recessions," Stuckler says bluntly, "can hurt. But austerity kills."

In a powerful new book, The Body Economic, Stuckler and his colleague Sanjay Basu, an assistant professor of medicine and epidemiologist at Stanford University, show that austerity is now having a "devastating effect" on public health in Europe and North America.

The mass of data they have mined reveals that more than 10,000 additional suicides and up to a million extra cases of depression have been recorded across the two continents since governments started introducing austerity programmes in the aftermath of the crisis.

In the United States, more than five million Americans have lost access to healthcare since the recession began, essentially because when they lost their jobs, they also lost their health insurance. And in the UK, the authors say, 10,000 families have been pushed into homelessness following housing benefit cuts.

The most extreme case, says Stuckler, reeling off numbers he knows now by heart, is Greece. "There, austerity to meet targets set by the troika is leading to a public-health disaster," he says. "Greece has cut its health system by more than 40%. As the health minister said: 'These aren't cuts with a scalpel, they're cuts with a butcher's knife.'"

Worse, those cuts have been decided "not by doctors and healthcare professionals, but by economists and financial managers. The plan was simply to get health spending down to 6% of GDP. Where did that number come from? It's less than the UK, less than Germany, way less than the US."

The consequences have been dramatic. Cuts in HIV-prevention budgets have coincided with a 200% increase in the virus in Greece, driven by a sharp rise in intravenous drug use against the background of a youth unemployment rate now running at more than 50% and a spike in homelessness of around a quarter. The World Health Organisation, Stuckler says, recommends a supply of 200 clean needles a year for each intravenous drug user; groups that work with users in Athens estimate the current number available is about three.

In terms of "economic" suicides, "Greece has gone from one extreme to the other. It used to have one of Europe's lowest suicide rates; it has seen a more than 60% rise."

In general, each suicide corresponds to around 10 suicide attempts and – it varies from country to country – between 100 and 1,000 new cases of depression. In Greece, says Stuckler, "that's reflected in surveys that show a doubling in cases of depression; in psychiatry services saying they're overwhelmed; in charity helplines reporting huge increases in calls".

The country's healthcare system itself has also "signally failed to manage or cope with the threats it's facing", Stuckler notes. "There have been heavy cuts to many hospital sectors. Places lack surgical gloves, the most basic equipment. More than 200 medicines have been destocked by pharmacies who can't pay for them. When you cut with the butcher's knife, you cut both fat and lean. Ultimately, it's the patient who loses out."

Such phenomena, he says, "are just a few of many effects we're seeing. And with all this accumulation of across-the-board, eye-watering statistics, there's a cause-and-effect relationship with austerity measures. These issues became apparent not when the recession hit Greece, but with austerity."

But public health disasters such as Greece's are not inevitable, even in the very worst economic downturns. Stuckler and Basu began to look at this before the crisis hit, studying how large personal economic shocks – unemployment, loss of your home, unpayable debt – "literally could get under people's skin, and cause serious health problems".

The pair examined data from major economic upsets in the past: the Great Depression in the US; post-communist Russia's brutal transition to a market economy; Sweden's banking crisis in the early 1990s; the East-Asian debacle later that decade; Germany's painful labour market reforms early this century. "We were looking," Stuckler says, "at how rises in unemployment, which is one indicator of recession, affected people's health. We found that suicides tended to rise. We wanted to see if there was a way these suicides could be prevented."

It rapidly became clear "there was enormous variation across countries", he says. "In some countries, politicians managed the consequences of recession well, preventing rising suicides and depression. In others, there was a very close relationship between ups and downs in the economy and peaks and valleys in suicides."

Investment in intensive programmes to help people return to work – so-called Active Labour Market Programmes, well developed in Sweden (where suicides actually fell during the banking crisis) but also effective in Germany – were a factor that seemed to make a big difference.

Maintaining spending on broader social protection and welfare programmes helped, too: analysis of data from the 1930s Great Depression in the US showed that every extra $100 per capita of relief in states that adopted the American New Deal led to about 20 fewer deaths per 1,000 births, four fewer suicides per 100,000 people and 18 fewer pneumonia deaths per 100,000 people.

"When this recession started, we began to see history repeat itself," says Stuckler. "In Spain, for example, where there was little investment in labour programmes, we saw a spike in suicides. In Finland, Iceland, countries that took steps to protect their people in hard times, there was no noticeable impact on suicide rates or other health problems.

"So I think we really noticed these harms aren't inevitable back in 2008 or 2009, early in the recession. We realised that what ultimately happens in recessions depends, essentially, on how politicians respond to them."

Poorer public health, in other words, is not an inevitable consequence of economic downturns, it amounts to a political choice – by the government of the country concerned or, in the case of the southern part of the eurozone, by the EU, European Central Bank and IMF troika.

Stuckler seizes on Iceland as an example of "an alternative. It suffered the worst banking crisis in history; all three of its biggest banks failed, its total debt jumped to 800% of GDP – far worse than what any European country faces today, relative to the size of its economy. And under pressure from public protests, its president put how to deal with the crisis to a vote. Some 93% of the population voted against paying for the bankers' recklessness with large cuts to their health and social-protection systems."

And what happened? Under Iceland's universal healthcare system, "no one lost access to care. In fact more money went into the system. We saw no rise in suicides or depressive disorders – and we looked very hard. People consumed more locally sourced fish, so diets have improved. And by 2011, Iceland, which was previously ranked the happiest society in the world, was top of that list again."

What also bugs Stuckler – an economist as well as a public-health expert – is that neither Iceland nor any other country that "protected its people when they needed it most" did so at the cost of economic recovery. "It didn't break them to invest in programmes to help people get back to work," he says, "or to save people from homelessness. Iceland now is booming; unemployment fell back to below 5% and GDP growth is above 4% – far exceeding any of other European countries that suffered major recessions."

Countries such as those in Scandinavia that took what Stuckler terms "wise, cost-effective and affordable steps that can make a difference" have seen the impact reflected not just in improved health statistics, but also in their economies. Which is why, occasionally, the austerity argument angers him.

"If there actually was a fundamental trade-off between the health of the economy and public health, maybe there would be a real debate to be had," he says. "But there isn't. Investing in programmes that protect the nation's health is not only the right thing to do, it can help spur economic recovery. We show that. The data shows that."

Drilling into the data shows the fiscal multiplier – the economic bang, if you like, per government buck spent, or cost per buck cut – for spending on healthcare, education and social protection is many times greater than that for money ploughed into, for example, bank bailouts or defence spending.

"That," says Stuckler, "seems to me essential knowledge if you want to minimise the economic damage, to understand which cuts will be the least harmful to the economy. But if you look at the pattern of the cuts that have happened, it's been the exact opposite."

So in this current economic crisis, there are countries – Iceland, Sweden, Finland – that are showing positive health trends, and there are countries that are not: Greece, Spain, now maybe Italy. Teetering between the two extremes, Stuckler reckons, is Britain.

The UK, he says, is "one of the clearest expressions of how austerity kills". Suicides were falling in this country before the recession, he notes. Then, coinciding with a surge in unemployment, they spiked in 2008 and 2009. As unemployment dipped again in 2009 and 2010, so too did suicides. But since the election and the coalition government's introduction of austerity measures – and particularly cuts in public sector jobs across the country – suicides are back.

'In Britain, we haven't yet seen what can happen when people are denied access to healthcare, but the US system gives us a pretty clear warning,' says Stuckler. Photograph: London News Pictures/Rex Features

Ministers seem unwilling to address the increase in suicides, arguing it is too early to conclude anything from the data. Stuckler points out that this is because the Department of Health prefers to use three-year rolling averages that even out annual fluctuations. But based on the actual data, he is in no doubt. "We've seen a second wave – of austerity suicides," he says. "And they've been concentrated in the north and north-east, places like Yorkshire and Humber, with large rises in unemployment. Whereas London … We're now seeing polarisation across the UK in mental-health issues."

He cites, also, the dire impact on homelessness – falling in Britain until 2010 – of government cuts to social housing budgets, and the human tragedies triggered by the fitness-for-work evaluations, designed to weed out disability benefit fraud.

"What's so particularly tragic about those," he says, "is that the government's own estimates of fraud by persons with disabilities is less than the sum of the contract awarded to the company carrying out the tests."

At least, though, no one in the UK has been denied access to healthcare – yet. Stuckler confesses to being "heartbroken" as what he sees happening to the NHS. "Britain stood out as the great protector of its people's health in this recession," he says. "By all measures – public satisfaction, quality, access – the UK was at or near the top, and at very low relative cost."

But that, he says, is now changing. "I don't know if people quite realise how fundamental this government's transformation of the NHS is," he says. "And once it's in place, it will be difficult, if not impossible, to reverse. We haven't yet seen here what can happen when people are denied access to healthcare, but the US system gives us a pretty clear warning."

He finds this all in stark and depressing contrast to the post-second world war period, when Britain's debt was more than 200% of GDP (far higher than any European country's today, bar Iceland) and the country's leaders responded not by cutting spending but by founding the welfare state – "paving the way, incidentally, for decades of prosperity. And within 10 years, debt had halved."

The Body Economic should come as a broadside, morally armour-plated and data-reinforced. The austerity debate, Stuckler says, is "a public discussion that needs to be held. Politicians talk endlessly about debts and deficits, but without regard to the human cost of their decisions."

What its authors hope is that politicians will take the message they have uncovered in the data seriously, and start basing policy on evidence rather than ideology. (Some already do. When Stuckler and Basu presented some of their findings in the Swedish parliament, the MPs' response was: "Why are you telling us this? We know it. It's why we set up these programmes." Others, notably in Greece, have sought to divert responsibility.)

"Our book," says Stuckler, "shows that the cost of austerity can be calculated in human lives. It articulates how austerity kills. It shows austerity and health is always a false economy – no matter how positively some people view it, because for them it shrinks the role of the state, or reduces payments into a system they never use anyway."

When times are hard, governments need to invest more – or, at the very least, cut where it does least harm. It is dangerous and economically damaging to cut vital supports at a time when people need them most.

"So there is an opportunity here," Stuckler concludes, "to make a lasting difference. To set our economies on track for a happier, healthier future, as we did in the postwar period. To get our priorities as a society right. It's not yet too late. Almost, but not quite."

The Body Economic: Why Austerity Kills by David Stuckler and Sanjay Basu is published by Allen Lane on May 21 (rrp £20).

• This article was amended on 16 May 2013. The original referred to every extra $100 of relief in states that adopted the American New Deal led to fewer deaths and suicides. That should have been an extra $100 per capita in those states, and has been corrected.